Pushing drugs

21st August, 2004

Dear Economist,
My younger brother has recently received a police caution for trying to sell drugs. How can I convince him that there’s no future in life as a drug pusher?
G.S., London

Dear G.S.,
Let’s not be hasty. You can’t say he’s making the wrong decision before you look at the facts. Once you’ve discussed them together, I’m sure you can reach a reasonable conclusion.

We know a fair bit about the attractiveness of selling crack cocaine because the celebrated economist Steven Levitt and his co- author Sudhir Venkatesh have analysed the accounts of one street gang in urban America. Assuming these accounts are representative, income for the basic drug-pusher is low – less than two pounds per hour in bad times and five pounds per hour when things go well.

However, the earnings for gang leaders are excellent – up to Pounds 70 per hour, tax-free. Turnover is high and many members anticipate rapid promotion.

It is a myth that the typical dealer is rich. Taking into account the low starting wage but also the prospects for advancement, on average dealers earn between Pounds 5 and Pounds 10 an hour, plus some perks. This looks like a poor wage, but with local unemployment high and skills typically low, it compares favourably with taxable alternatives such as cleaning or flipping burgers.

Your brother should consider his own earnings potential and weigh up the pros and cons. There are some things he should bear in mind: in a four-year period, he can expect to be shot twice, arrested six times, and he runs a one-in-four chance of being killed.

Once he has decided how much he values his life he can make a rational choice. You may or may not be glad to hear that the gang typically meets funeral expenses.

First published at ft.com.

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